The wealthy, the comfortable middle and the rest: Australia’s wealth and income ladder explained

“If poor people knew how rich rich people are, there would be riots in the streets.” Those are the exact words of American actor and comedian Chris Rock during a past interview with New York magazine. He was referring to the enlarging gap between the rich and the poor in the US.  


Here at home, studies have shown the clear lines that segment the rich, the comfortable middle and the rest. And the Coronavirus, too, has caused an economic shakeup like never seen in decades, further reconstructing the very nature of wealth and income distribution in Australia. 


But amid plans to recover from the ravaging pandemic, one thing remains clear – the rich are getting richer. Latest figures from the Australian Bureau of Statistics suggest that wealthy Australians are pulling away from the rest of the country, raising the inequality gap to a record high.


So what exactly is going on with Australia’s well-off, middle class, and the low earners? 


In a last year study, Acoss noted that close to half of Australia’s private wealth is owned by 10% of the country’s richest. Coming in second are about 30% of the “comfortable middle” holding about 38% of Australia’s household wealth, leaving a 16%-stake to the rest.


The research which sought to compare the nation’s upper, middle and lower wealth and income rungs further uncovered that the top 20% with wealth averaging $3.3 million own at least 99 times the wealth held by the lowest 20%, with an average of about $36,000.

The bottom, middle and upper rungs

According to Acoss, the lowest 10% earn an average weekly wage of $592 or $30,784 annually. This category typically comprises the individuals relying on JobSeeker Payment. A household on Jobseeker Payment earns about $341 or $610 weekly in social security payments for a single individual and a single parent with children respectively.


The middle-income earners typically comprise couples with children living off one fulltime job and a part-time wage. The middle 20%, generates an average weekly income of $1,884 ($97,986 pa), the report stated. Here, the couple is essentially raising dependent children with one partner earning about $85,000pa and the other an average low of $30,000pa. Such households are likely to maintain a fair asset base. 


In the top category, couples with two full-time wages dominated the highest 20%. The average income of a model rich household averages $4,166 per week ($216,627 pa), according to the research. Compared to their middle-income counterparts, households in this category had about 10 times more average investment income. The top 20% households recorded an average annual income of about $85,000 for each partner. These individuals were likely to sustain a comfortable lifestyle with multiple financial buffers in case of a crisis occurs.


However, the net income for the top 5% soars to an average of $6,796 per week or $353,371 annually. Unlike the top 20%, the highest 5% is mostly made up of couples with zero dependents and one high income generator. Both incomes afford them an exclusive lifestyle among the wealthy.


Between 2017 and 2018, the net worth of the richest tenth of Australian households hit $4.75 million, substantially promoted by a range of business investments, company stocks, and real estate assets. This segment holds about 46% of the total household wealth.


The comfortable middle – with an average net worth of below $1.3 million – hold close to half of that figure in their own homes, superannuation and investment properties. The lowest earning households record an average net worth of around $277,000 comprising superannuation and owner-occupied homes.


On average, households with referenced persons over the age of 65 years recorded a net worth of more $1.3 million – about 1.5 times that of the younger families. 


But the survey also found that income distribution is more uniform compared to wealth. The top 20% richest individuals have annual pre-tax incomes of about $330,000, the middle 20% make about $116,000 while the lowest 20% earn $41,000.


In terms of income from investments, the biggest chunk is concentrated at the topmost. Close to 70% of investment income goes to the 20% most moneyed households. The fifth wealthiest Australians cash about $1,000 worth of investment income weekly even as their top 5% counterparts pocket about three times more ($3,000pw on average).


As the new year rolls out, the incomes of lower earners have been bolstered by government support programs such as the Covid-19 JobSeeker initiative, JobKeeper as well as the one-time stimulus payouts to welfares.


The government stimulus initiatives notwithstanding, inequality could worsen if the support programs are retracted, unemployment numbers continue to soar, and wage rates stagnate, this is according to the Australian Council of Social Service chief executive Cassandra Goldie.


If the state organ’s word is anything to go by, there’s still a lot more to be done before “normalcy” becomes a reality for most Australian households.


“If the government continues on its current path focusing on tax cuts and tax incentives for private sector activity there is no question that into the future we will see a serious increase in both income and wealth inequality and the concentration of wealth in the hands of fewer and fewer people,” Goldie warned.

As earlier indicated, the pandemic has further altered the inequality levels. A 2020 report by the International Monetary Fund (IMF) revealed the worrying income distribution patterns during pandemics including the 2003 SARS, Zika Virus in 2016, Ebola in 2014, MERS in 2012 and the 2009 Swine Flu outbreak. In all of the analysed instances, the IMF noted that pandemics resulted in higher income inequality, with the lower income generators being the most affected.

Mike Mortlock is a Quantity Surveyor and Managing Director of MCG Quantity Surveyors. MCG Specialise in Tax Depreciation Schedules and Construction Cost Estimating. You can visit them at Mike Mortlock is a Tax Depreciation expert, Quantity Surveyor and Managing Director of MCG Quantity Surveyors. He is a regular speaker and commentator having been featured in the Financial Review and Sky Business. MCG Specialise in Tax Depreciation Schedules and Construction Cost Estimating for investors. You can visit them at